Definition of Chapter 11:
Protection from creditors given to a company in financial difficulties for a limited period to allow it to reorganize.
Section of the US bankruptcy code under which a firm can file for protection against creditors while continuing to operate under existing management. The firm must have a court-approved plan to reorganize the business and must make it work.
Chapter 11 is a form of bankruptcy that involves a reorganization of a debtor’s business affairs, debts, and assets, and for that reason is known as "reorganization" bankruptcy. Named after the U.S. bankruptcy code 11, corporations generally file Chapter 11 if they require time to restructure their debts. This version of bankruptcy gives the debtor a fresh start. However, the terms are subject to the debtor’s fulfillment of its obligations under the plan of reorganization.
Chapter 11 bankruptcy is the most complex of all bankruptcy cases. It is also usually the most expensive form of a bankruptcy proceeding. For these reasons, a company must consider Chapter 11 reorganization only after careful analysis and exploration of all other possible alternatives.
How to use Chapter 11 in a sentence?
- If the debtor does not suggest a program, the creditors may propose one instead.
- If a company filing for Chapter 11 opts to propose a reorganization plan, it must be in the best interest of the creditors.
- It was the fourth airline to go into Chapter 11 since December.
- The trend of retail companies filing for Chapter 11 has continued into the early part of 2020. On Jan. 23, 2020, CNBC reported that Fairway Market, a grocery chain based in New York City, filed for Chapter 11 bankruptcy and was shuttering five of its 14 stores and a distribution center while putting its other stores up for auction.
Meaning of Chapter 11 & Chapter 11 Definition